Get ready Mums and Dads this is how child tax will be caculated in 2013 and as a result many of you are about to get done over by these changes.

How to workout your child support for 2013
Summary of key steps in determining child support payable for a particular child

Step 1: Work out each parent’s child support income amount (section 32). This is the parent’s taxable income plus adjustments to take into account a number of other forms of “income” (section 33), less:
– a living allowance (section 34);
– any allowance for other dependent children (section 35); and
– any allowance for other children from other relationships (referred to as child support groups) for whom the parent is paying child support (section 36)

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Step 2: Work out the parents’ combined child support income
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Step 3: Work out each parent’s income percentage (section 31)
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Step 4: Work out each parent’s and non-parent carer’s percentage of care for the child
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Step 5: Work out each parent’s and non-parent carer’s care cost percentage for the child (section 16 and schedule 1) that relates to their care percentage
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Step 6: For each parent, subtract their care cost percentage from their income percentage (section 18). If the answer is positive (i.e. the income percentage exceeds the care cost percentage), the parent is a liable parent. If the answer is negative, (i.e. the income percentage is less than the care cost percentage), the parent is a receiving carer
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Step 7: Work out the expenditure for the child using the child expenditure table (section 36D), taking into account the combined child support income amounts of the parents, the number of children in the child’s child support group; and the age of those children. This expenditure amount is divided by the number of children in the child support group to get a per child amount
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Step 8: The annual rate of child support payable by the parent for the child is worked out using the formula (section 29):
(parent’s income percentage – parent’s care cost percentage) x expenditure on the child
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Step 9: The amount that a carer receives is determined in sections 36A-C. A receiving parent receives an amount calculated applying the formula in step 8, based on their income and care cost percentages. If this is less than the amount that the liable parent pays, the balance is split between any other receiving carers
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Step 10: When a parent is paying child support for more than one child support group, the amount may be capped. If the amount calculated at step 8 is more than the amount calculated under the multi-group cap (section 29), the multi-group cap amount applies. This cap ensures the liability is no more than it would be if all the children from the various child support groups were living together
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Step 11: The amount payable may also be subject to minimum annual rate (section 30)

Dont worry, like any efficent tax they will be deducting at source and we all know IRD never get it wrong.

Regards

Scrap